Karachi, September 10, 2023 – The Federal Board of Revenue (FBR) in Pakistan has established stringent penalties for individuals, businesses, Associations of Persons (AOPs), and companies that fail to file their annual income tax returns by the due date.
As the deadline for the tax year 2023 approaches on September 30, 2023, taxpayers are urged to ensure timely compliance to avoid these penalties.
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FBR officials have emphasized that timely filing of income tax returns is mandatory for all salaried individuals, business owners, AOPs, and companies with special tax years. Failure to meet this obligation will result in financial consequences.
According to the FBR guidelines:
Penalty for Late Income Tax Return Filing: If a taxpayer fails to furnish their income tax return as required under section 114 of the Income Tax Ordinance, 2001 within the due date, they will be subject to penalties. The penalty is calculated as the higher of:
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a) 0.1 percent of the tax payable for each day of default.
b) Rs. 1,000 for each day of default.
However, there are specific minimum and maximum penalty limits:
Minimum penalty:
i) Rs. 10,000 for individuals with seventy-five percent or more income from salary.
ii) Rs. 50,000 in all other cases.
Maximum penalty: The penalty shall not exceed two hundred percent of the tax payable by the person in a tax year.
The penalty amount can also be reduced by 75 percent, 50 percent, and 25 percent if the return is filed within one, two, and three months, respectively, after the due date or extended due date of filing the return as prescribed by law.
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For clarification, “tax payable” refers to the tax chargeable on taxable income based on assessments made or treated to have been made under section 120, 121, 122, or 122D.
Penalty for Failure to File Wealth Statement: Individuals who fail to submit their wealth statement along with their income tax return by the due date will incur a penalty of 0.1 percent of their taxable income per week or Rs. 100,000, whichever amount is higher.
Penalty for Not Filing Foreign Assets and Income Statement: Failure to furnish a foreign assets and income statement within the due date will result in a penalty of 2 percent of the foreign income or the value of foreign assets for each year of default.
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The FBR is stressing the importance of adhering to these deadlines and requirements to avoid these financial penalties. Non-compliance not only incurs monetary penalties but may also lead to legal consequences.
Taxpayers are encouraged to consult with tax professionals or visit the official FBR website for detailed guidelines and assistance in filing their income tax returns accurately and on time. It is essential to stay informed about the latest tax regulations to ensure full compliance with the law.
